Civil Law

Resolving Issues with Owner-Unknown Properties in Japan: Utilizing New Management Orders

Japanese Attorney at Law - Bengoshi L.L.

• 7 min read
Slide overview: Japan’s Owner-Unknown Property Management Orders—petition process, manager powers, business use cases
TL;DR: Japan’s new Owner-Unknown Property Management Orders (Civil Code Arts. 264-2 ff.) let courts appoint managers to oversee, repair—or even sell—land or buildings whose owners cannot be found. Developers, neighbors, and municipalities now have a powerful tool to unlock stalled projects and eliminate blight, but must budget for deposits and court oversight.

Table of Contents

  1. Introduction: Beyond Identifying Heirs
  2. What are Owner-Unknown Property Management Orders?
  3. Who Can Petition for a Management Order?
  4. The Court Process and the Manager's Role
  5. Key Differences from Traditional Systems
  6. Practical Applications and Current Usage
  7. Considerations for Businesses
  8. Conclusion: A Targeted and Powerful Mechanism

Introduction: Beyond Identifying Heirs

Japan's comprehensive legal reforms in 2021, aimed at tackling the pervasive issue of "land with unknown owners" (shoyūsha fumei tochi), included more than just rules for registering inheritances or reverting land to the state. A critical component, effective from April 1, 2023, was the creation of new court-ordered management systems specifically designed for individual properties whose owners are unknown or unlocatable.

These Owner-Unknown Land Management Orders (所有者不明土地管理命令 - Shoyūsha Fumei Tochi Kanri Meirei) and Owner-Unknown Building Management Orders (所有者不明建物管理命令 - Shoyūsha Fumei Tatemono Kanri Meirei), established under Articles 264-2 through 264-8 of the revised Civil Code (民法 - Minpō), provide a powerful legal mechanism to address situations where specific assets are effectively paralyzed or causing problems due to uncertain ownership. Unlike broader estate administration processes, these orders focus on managing, and potentially disposing of, individual problematic properties.

For businesses, developers, adjacent landowners, and municipalities in Japan, these new management orders represent a significant development. They offer a potential solution for unlocking stalled projects, resolving neighborhood blight or safety concerns, and facilitating necessary actions concerning properties previously stuck in legal limbo. Understanding how these orders work, who can utilize them, and their practical applications is becoming increasingly important.

What are Owner-Unknown Property Management Orders?

These systems empower District Courts (Chihō Saibansho) to appoint a manager (kanrinin) for a specific piece of land or a building when its owner cannot be found or their whereabouts are unknown.

  • Legal Basis: Civil Code Articles 264-2 (Land) and 264-7 (Buildings, applying land rules mutatis mutandis).
  • Scope: The key distinction is the focus on an individual property asset, not the entirety of an absent person's assets or an entire inherited estate.
  • Trigger: The system is activated when (1) it is known or suspected that the owner exists but they, or their whereabouts, cannot be identified after reasonable effort, AND (2) there is a necessity for management of the property.
  • Initiation: An "interested party" (rigai kankeinin) must file a petition with the District Court that has jurisdiction over the property's location.

Who Can Petition for a Management Order?

The definition of an "interested party" is crucial. It's not limited to co-owners or direct stakeholders but can include a range of actors who have a legitimate reason for seeking the property's proper management:

  • Co-owners: Other individuals or entities sharing ownership of the property.
  • Lienholders/Mortgagees: Parties with registered security interests in the property.
  • Adjacent Landowners: Neighbors suffering detriment from the property's neglect (e.g., overgrowth, risk of collapse, boundary issues) or needing cooperation for their own property use.
  • Developers/Businesses: Entities whose projects are stalled or negatively impacted by the adjacent ownerless property (e.g., needing consent for access, infrastructure, or redevelopment).
  • Government Entities: National or local government bodies needing to manage the land/building for public purposes, such as:
    • Disaster prevention (e.g., securing dangerous cliffs or structures).
    • Public works projects requiring land acquisition or adjacent property management.
    • Implementing measures under the Special Measures Act on Promotion of Measures for Vacant Houses (空家等対策の推進に関する特別措置法 - Akiya-tō Taisaku no Suishin ni Kansuru Tokubetsu Sochi Hō, often called the "Akiya Act"). Municipalities can use this management order system to address hazardous or blighting vacant houses (akiya) when owners are unresponsive or unknown.

The Court Process and the Manager's Role

  1. Petition & Investigation: The interested party files a petition detailing the property, the reasons why the owner is considered unknown/unlocatable, and the necessity for management. The court will typically require evidence of efforts made to find the owner.
  2. Appointment: If the court finds the requirements met, it appoints a manager (kanrinin). While the law doesn't restrict the profession, appointed managers are often lawyers (bengoshi), reflecting the legal complexities involved. Statistics reported by the Ministry of Justice in late 2024 indicated lawyers constituted about 76% of appointees, with judicial scriveners (shihō shoshi) accounting for about 23%.
  3. Manager's Basic Powers (Art. 264-3): The appointed manager automatically has the authority to perform:
    • Acts of Preservation: Necessary actions to maintain the property's value (e.g., urgent repairs, paying fixed asset taxes from property income).
    • Acts Utilizing or Improving within the Property's Nature: Actions consistent with the property's intended use (e.g., continuing an existing lease and collecting rent, basic maintenance like grass cutting).
  4. Extended Powers Requiring Court Permission (Art. 264-4): This is a critical feature. The manager can perform actions beyond basic preservation and management only if they obtain specific permission from the District Court. These powerful actions can include:
    • Sale (任意売却 - Nin'i Baikyaku): Selling the property on the open market.
    • Demolition (取壊し - Torikowashi): Tearing down structures on the land.
    • Major Alterations/Renovations (変更 - Henkō): Significant changes to the property.
    • Entering into New Leases: Granting new usage rights.
      The court grants permission based on the necessity and appropriateness of the action for managing the property or settling related interests.
  5. Funding and Remuneration: The manager's expenses and court-approved remuneration are typically paid from any income generated by the property (e.g., rent) or from the proceeds if the property is sold. To cover initial costs (investigation, court fees, urgent preservation), the petitioner is usually required to deposit a sum of money (予納金 - yonōkin) with the court. While amounts vary, reports suggest these deposits are often in the ¥200,000-¥300,000 range, potentially lower than typically required for traditional absentee property managers.
  6. Termination: The management order terminates when the owner appears, the property is sold, or management is no longer necessary. Proceeds from a sale are held for the owner after deductions.

Key Differences from Traditional Systems

It's important to distinguish these new management orders from older systems:

  • Absentee Property Manager (不在者財産管理人 - Fuzaisha Zaisan Kanrinin) (Civil Code Art. 25 ff.):
    • Jurisdiction: Family Court (Katei Saibansho).
    • Scope: Manages all assets of a known person whose whereabouts are unknown (an "absentee"), not just one property.
    • Purpose: Primarily long-term preservation of the absentee's entire estate. Disposition (like sale) requires Family Court permission and is often more constrained.
    • Initiation: Petition usually by family members or creditors concerned with the entire estate.
  • Inherited Estate Manager (相続財産管理人 - Sōzoku Zaisan Kanrinin) (Civil Code Art. 897-2 ff.):
    • Jurisdiction: Family Court.
    • Scope: Manages an entire inherited estate when heirs are unknown or have all renounced.
    • Purpose: Orderly administration, debt settlement, and liquidation/distribution of the whole estate.
    • Initiation: Petition usually by creditors, legatees, or public prosecutors.

The new Owner-Unknown Property Management Orders (Civil Code Art. 264-2 ff.) under the District Court are specifically tailored for resolving issues tied to a single piece of property when the owner (not necessarily an entire estate or all assets of an absentee) is the problem, offering a potentially faster and more targeted approach, especially when disposition is the desired outcome.

Practical Applications and Current Usage

Since their introduction in April 2023, these new management orders have seen significant use. Ministry of Justice data indicated well over 1,000 petitions were filed within the first year and a half.

  • Facilitating Sales: The most common stated purpose for seeking a management order, by far, has been to enable the sale of the ownerless property. This suggests the system is being actively used to unlock frozen assets and transfer them to new owners who can utilize them.
  • Resolving Boundary/Rights Issues: The second most common usage involves appointing a manager to represent the unknown owner in discussions or agreements concerning boundary clarifications, easements, or other rights affecting adjacent properties.
  • Addressing Dilapidated Vacant Houses (Akiya): Municipalities are increasingly recognizing this system as a tool under the Akiya Act. When owners of hazardous vacant houses cannot be located or fail to respond to orders for improvement or demolition, the municipality, as an interested party concerned with public safety, can petition for a manager who may then be authorized by the court to undertake necessary repairs, demolition, or sale.
  • Overcoming Development Roadblocks: Private developers or adjacent landowners whose plans are hindered by an abutting ownerless property (e.g., needing consent for shared access, unable to acquire a necessary parcel, suffering blight) can petition for a manager. If sale is approved, this can facilitate site assembly or project execution.
  • Supporting Public Works: While land expropriation procedures exist, securing land for public projects can be complicated by unknown owners. Appointing a manager might provide an alternative or supplementary route for the government to negotiate acquisition or necessary rights concerning such parcels.

Considerations for Businesses

The introduction of these management orders has several implications for businesses involved with Japanese real estate:

  1. A New Problem-Solving Tool: If your business operations or development projects are negatively impacted by an adjacent property whose owner is unknown or unlocatable, petitioning for a court-appointed manager under Art. 264-2 is now a viable legal strategy. This could lead to resolving safety hazards, facilitating necessary consents, or even acquiring the property if a court-approved sale occurs.
  2. Potential Impact on Adjacent Properties: Businesses should be aware that neighboring properties might be placed under court-ordered management. This could lead to changes in the property's condition, use, or even ownership through a manager-led sale, potentially affecting surrounding property values or development plans.
  3. Enhanced Due Diligence: When acquiring property or conducting site assessments, due diligence should now include checking whether the target property or adjacent properties are subject to a pending or active management order petition filed with the District Court.
  4. Understanding Municipal Powers: Businesses operating in areas with vacant property issues should be aware that local governments now have this stronger tool under the Akiya Act framework to intervene with problematic ownerless properties, potentially leading to demolition or managed sale of nearby structures.

Conclusion: A Targeted and Powerful Mechanism

The Owner-Unknown Land and Building Management Orders introduced by the 2021 Civil Code revisions represent a significant advancement in Japan's legal framework for property management. By creating a targeted, court-supervised process focused on individual problematic assets under the jurisdiction of District Courts, these systems offer a more efficient and potentially less costly alternative to traditional absentee or estate management procedures for specific situations.

Primarily utilized so far to facilitate the sale of ownerless properties, these orders provide a crucial mechanism for unlocking frozen assets, addressing neighborhood blight and safety concerns (particularly concerning akiya), and overcoming obstacles in both private development and public works. While the process still requires navigating court procedures and involves costs, these new management orders equip businesses, individuals, and government bodies with a much-needed tool to proactively resolve issues arising from the persistent challenge of owner-unknown properties in Japan.